A Novel Demand Response Model and Method for Peak Reduction in Smart Grids - PowerTAC

Sanjay Chandlekar (International Institute of Information Technology, Hyderabad), Arthik Boroju (Indian Institute of Technology Ropar), Shweta Jain (Indian Institute of Technology Ropar), Sujit Gujar (International Institute of Information Technology, Hyderabad)

Abstract

We study the Demand Response behavior of smart grid customers in response to the offered discounts for peak reduction. We propose a model that depicts the probability of a customer reducing its load as a function of the discounts offered. This function is parametrized by the rate of reduction (RR). We provide an optimal algorithm, MJS-ExpResponse, that allocates the discounts to each customer by maximizing the expected reduction under a budget constraint. When RRs are unknown, we propose a Multi-Armed Bandit based online algorithm, namely MJSUCB-ExpResponse, to learn RRs. We experimentally show that it exhibits sublinear regret and showcase its efficacy in a real-world smart grid system using the PowerTAC simulator as a test bed.